Home office deductions are one of the perks of working from home, however, there are clear drawbacks too. If you meet the IRS guidelines for deducting your home office, you can expect to get a hefty tax break. On the other hand, deducting your home office can increase your chances of getting audited. Additionally, by claiming your home office you can get taxed when selling your home. This article will cover the ins and outs of home office deductions.
IRS GUIDELINES
Is your home office your “principal place of business”? Is your office used “regularly and exclusively” for business? All of the above questions must be answered with a “yes” if you want to meet IRS guidelines for deducting your home office.
“PRINCIPAL PLACE OF BUSINESS” –
How do you know if your office can be determined as your principal place of business? Well, do you spend most of your time and make the most of your money from your home office? If you work onsite at a client’s office the majority of the time, then you probably aren’t eligible. On the other hand, if you perform all of your daily tasks from your home office, you probably are eligible. However, if you are offsite a majority of the day, but come home and perform substantially administrative activities from your home office, you may still be eligible. You cannot perform these administrative activities anywhere else but from your home office.
“REGULARLY AND EXCLUSIVELY” –
You must use your home office regularly and exclusively. Your office doesn’t need to be a separate room, but it does need to be used “regularly and exclusively” for business. This means that you need to keep all family activities and items away from your office. Keep your children off of your computer and your personal mail off of your desk, amongst other things. Additionally, if you have more than one business, you cannot use your home office for your other business. For example, if you are a salaried web designer, you cannot work on projects from your salaried job in your home office. Łukasz Budziaszek Prywatny Gabinet Lekarski